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Where is the CFPB to Protect Those Badgered For Phantom Debt?

Where is the CFPB to Protect Those Badgered For Phantom Debt?

This unchecked government agency is nowhere to be found for those hounded by scammers for debt they don’t owe.

Last week, Bloomberg published an article how one man had enough of fake debt collectors badgering him and his family to collect a phantom debt, money he did not owe. Andrew Therrien used his own money and time to track down these people and only found assistance from the FBI and the Federal Trade Commission (FTC).

You know what agency was missing? The Consumer Finance Protection Bureau (CFPB), the brainchild of Sen. Elizabeth Warren (D-MA). Instead of concentrating on fraud, the agency decided to target businesses already well-regulated that help the poor.

The Man Who Had Enough

Andrew Therrien is the man who had enough. He is one of the millions of Americans who found themselves wrapped up in phantom debt, or money they don’t actually owe. From Bloomberg:

Therrien had been caught up in a fraud known as phantom debt, where millions of Americans are hassled to pay back money they don’t owe. The concept is centuries old: Inmates of a New York debtors’ prison joked about it as early as 1800, in a newspaper they published called Forlorn Hope. But systematic schemes to collect on fake debts started only about five years ago. It begins when someone scoops up troves of personal information that are available cheaply online—old loan applications, long-expired obligations, data from hacked accounts—and reformats it to look like a list of debts. Then they make deals with unscrupulous collectors who will demand repayment of the fictitious bills. Their targets are often poor and likely to already be getting confusing calls about other loans. The harassment usually doesn’t work, but some marks are convinced that because the collectors know so much, the debt must be real.

Bloomberg noted the FTC has “broken up” 13 scams since 2012 after a call center India broke up after it was caught “making 8 million calls in eight months to collect made-up bills.” Unfortunately, officials have a hard time identifying “the original perpetrators because the data files had been sold and repackaged so many times.”

Therrien would spend all night finding owners of these agencies and try to coax them on his side. Other times he’d make a small payment to track bank records. This led him to “people with convictions for counterfeiting, stock fraud, drug dealing, and child molestation.”

Therrien’s problem led him to the Tucker brothers: Ted, Scott, and Joel. They had a scheme with a payday-loan store and managed to make a ton of money by having websites “owned on paper by an American Indian tribe, which could claim sovereign immunity from regulators.” These websites would charge “as much as $150 interest on a two-week, $500 loan—an annualized interest rate of about 700 percent.”

Everything eventually fell apart for the Tuckers, which led Therrien to conclude this:

By November 2015 he developed a simple theory. Tucker’s business had given him access to a huge database of people who’d applied for loans—including, just maybe, the one Therrien had taken out in his copier-selling days. What if, when Tucker was broke and needed money, he’d taken applicants’ personal information, invented loan balances, and sold the list as a portfolio of delinquent debt?

He contacted the FBI and FTC about his theory. Weirdly enough, the CFPB didn’t appear in the article.

In 2016, one collection manager emailed Therrien that contained “phantom-debt files, with names and Social Security numbers.” It came with the name of Rob Harsh, the IT guy for Tucker:

Harsh, who declined to comment for this story, testified that Tucker had asked him to manipulate a database of almost 8 million payday-loan applications, writing in a made-up lender and adding an amount owed of $300 for each person.

Therrien had been right all along.

Why Have the CFPB?

Go to the CFPB website and it has its purpose in big bold letters: An agency “that makes sure banks, lenders, and other financial companies treat you fairly.” The agency came about after the 2008 financial crisis in Dodd-Frank. It doesn’t answer to anyone, which gave former head Richard Cordray unchecked power.

Instead of going after the people like Tucker, the CFPB passed a new rule against legitimate payday businesses:

The CFPB’s new rule will stop payday loan debt traps by requiring lenders to take steps to make sure people can repay their loans.

The rule will also prevent lenders from attempting to collect payment from people’s bank accounts in ways that may rack up excessive fees. Our new debt trap protections will apply to certain small dollar loans including payday loans and certain vehicle title loans.

The rules passed in October and the owners of these businesses have lashed out at the agency because the majority of the customers need the money for emergencies. With too many regulations, the customers could end up going to people like the Tuckers:

“Taking away their access to this line of credit means many moreAmericans will be left with no choice but to turn to the unregulated loan industry, overseas andelsewhere [sic], while others will simply bounce checks and suffer under the burden of greater debt,” said Edward D’Alessio, head of the Financial Service Centers of America, a trade group.

The left is always going crazy over loopholes and yet these rules did not close that important loophole the Tuckers used to scam people.

A bipartisan group in the House have vowed to fight against the new rule. Rep. Dennis Ross (R-FL) said that many in his state rely on its “carefully regulated small-dollar lending industry to make ends meet” and insisted that those in the House “cannot stand by while an unaccountable federal agency deprives out constituents of a lifeline in times of need, all while usurping state authority.”

House Financial Services Committee chairman Jeb Hensarling (R-TX) reminded the CFPB that Americans have the freedom to choose whatever loan they want and don’t need an “unelected Washington bureaucrat” to tell them what to do.

But again. What is the point of the CFPB if they will go after the legitimate businesses instead of those who commit fraud against others? You know, those people like the Tuckers who sell people’s information and pull money from others for a debt they don’t owe?

If the FTC can handle this, why have the CFPB?


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Excellent expose’, Mary. Thanks.

I suspect the CFPB was far too busy going after conservatives?

Well yeah. Poor individual citizens can’t help the CFPB or it’s Democrat benefactors. But big businesses with deep pockets can pay “fines” that can then get funneled to Democrat front-groups which can then donate a large chunk of that money to Democrat politicians.

Nice business ya’ got there, shame if anything happened to it.

The CFPB’s problem was not it’s charter, but the fact that it was hijacked to serve as a pay-to-play entity and attack dog.

Were it used properly- the agency would be capping lending on student loans. Somehow this predatory lending practice of putting a 22 year old into 200k of unsecured debt which can never be bankrupted is just fine.

    4th armored div in reply to Andy. | December 11, 2017 at 12:40 pm

    the higher education industry has gone way out of cost/benefit
    because uncle sugar backed these outrageous loans which effectively put our kids in perpetual servitude.

    in any other industry would have gone out of business.

    during the past 16 years wages, with these exceptions, have been stagnant.

      A careful examination of the data shows that successful people have college educations. Ergo give every kid a college education and everyone will be successful. Lib logic 101.

Some accurately deduced this was just another sue-and-settle agency, this one with no oversight from anyone.

The FTC should handle this, CPFB is just a me-too agency padded with 10,000 liberal bureaucrats doing nothing but sucking-on-the Feds teat.

CPFB is nothing but an extortion scheme that takes money from businesses in exchange for being left alone, and redirects that money to Democratic Party goals and elections.

Having been through the Dave Ramsey Financial Peace University (Ok, so it’s about 11 videos, not a *real* university, but I digress), all of the collection procedures listed are quite familiar. Still, I was unaware that *fraudulent* loans got chased back to people with quite the same vigor that the slavering wolves of the debt collectors use in chasing after fifty bucks from a local business.

I’ve found a huge percentage of bogus calls just vanish if you say, “We’re concerned about fraud, so I’m going to need your company name, address, and phone number to start.” (The word ‘fraud’ makes more bogus calls ‘click–dialtone’ than about anything.)

Dave Ramsey for CFPB Director!

    FPU is more valuable than most of what is taught in actual universities. So instead of going 100k in debt, spend the 100 dollars…. or just listen to the podcast.

Hold up one quick second. I am Andrew Therrien and I am the subject of this story. There are a few things I would like to square away here.

There are many mistakes in your logic and journalistic integrity over and above that Ted was a lender and not a Tucker. Blaine was the third Tucker. Ted was an honest man raked over the coals by the FTC while the real criminals like Joel Tucker and David Harbour got away with murder leaving Ted destitute and inevitably dead.

Is the CFPB is broken? Yes…But before you start cheering and buying me cases of beer and champagne to celebrate, there is a reason why we are at this crossroads.

I am a believer in the rule of law. That being said, Good Conservatives and common sense Liberals (there are few which is why we are in this mess) came up with ideas on how to regulate payday lending as well as collections. An example, criminal caps on usury, not allowing sham alliances with Native American Indian Tribes, etc. These were shot down by congress because everyone from Wasserman-Shultz and Sheldon Whitehouse to Jeb Hensarling, Kevin Yoder, Blaine Luetkemeyer, and Paul Ryan took huge dollars from Payday Lenders or their associates. Therefore, common sense reform was not taking place. This means what…THE LEGISLATURE failed the American people, not the CFPB. The CFPB is trying to make rules that may or may not be enforceable because it is arguable in court as to if they are authorized to make those changes. You cant blame the CFPB for that, blame the lawmakers and the lobbyists for jumping ahead of the line for the working class asshole who keeps getting screwed by donkeys and elephants with a complete disregard for the common man. The CFPB is now going to be run by a guy on the payroll of the people he is supposed to be regulating? Its a vasectomy of the justice system with no real resolution that takes care of your everyday American. We should be focused on common sense rules that allow for business to thrive while still protecting consumers or as you call it “The underbanked” which by the way is a bullshit term. If someone is underbanked it is because they cant pay anything back and shouldnt get access to credit.

Onto the FTC. The FTC has a lot of great people in it. Tankersley being on of them. If he wasnt he would be making millions as a private firm partner but instead has stayed at the FTC making maybe $120K per year. That being said, he doesnt have the f*cking resources to do what he needs to do and that puts consumers in harms way. The red tape that has been put in his way made him go half assed after Joel Tucker which actually ended up putting consumers in harms way. There are more debt portfolios out there that are fake but the Commission decided they could just go after the low hanging fruit. So since Tucker was strung up on a debt he will never pay, more calls then ever come to my phone telling me I will be arrested if I dont pay them right away. They just change the name from the “invalidated loan” to one of the 90 lending companies Tucker oversaw and argue the FTC didnt “outlaw” that portfolio.

More than anything a few things need to happen. There needs to be a federal criminal usury interest rate cap. Managed by the CFPB. Should be no more than 40%APR. A serial number and database needs to be registered to any file that is sold to a third party holding all chain of title and access to backup records and it should be part of SOX compliance. If the consumers social doesnt show that serial number as part of their profile, beat it, its fake. If a collector calls someone and says “Im calling from the Providence County courts and he is actually a meth dealer working for Doug MacKinnon in Buffalo and there is a pattern of behavior in the complaint database, we should be able to tap the phone lines for a period of 6 months to ensure no one is breaking the law. If they do, shut down for life, banned list gets activated. Companies, owners and collectors. Jail time for collectors and owners.

We also need to revamp the FDCPA. I am a business guy. If a collector calls at 8:58, screw that, he isnt going to be fined. He gets a probationary slap on the wrist. He tells someone he is going to “rape my wife” over a VOIP line where I dont know where he is calling from we should lock him up 2 year minimum. The punishment should not fit the crime, it should be so damn terrible these jackasses smarten up and say its not worth it.

How is this paid for? Debt is being currently sold at .0001 on the dollar. These sales should be .002 on the dollar and a portion of it given to the feds to operate the software.

Oh, I cant be conservative because I want more regulation…Think again, the ACA, DBA, and other trade organizations had all the time in the world to co author common sense solutions that protected consumers and generated businesses and jobs. Instead they were pigs and now we need to crack down to get rid of the bad actors.

As for the FBI, apparently you dont read anything other than the talking points given to you about how terrible the CFPB must be….THE FBI has known about this for 3 years! NOTHING has been done about it other than a few interviews. The wrong people have been arrested and Joel Tucker the mastermind behind it all is walking free.

In the end, common sense laws, funding for true action to be taken within the states and federal enforcement agencies, and a step back to ask whenever we start on our soap partisan soapboxes and think “whats good for the average Amercian”

Have some respect and dignity.

    Thank you, Andrew, for your corrections and added insight. Your knowledge and perspectives (from being in the middle of this, “where the rubber hits the road” so to say) are invaluable.

    I don’t know whether you are a regular here, but, if not, I would like to invite you to stick around. Enlightening input is greatly appreciated.

The CFPB isn’t about Consumer Protection.
There ain’t no money in that.
No, it is a cushy Brueaucracy and a good place to park Relatives, Friends, and hangers-on…